LIMRA: U.S. pension risk transfer sales jump 31% in second quarter 2023

Total U.S. pension risk transfer (PRT) sales were $16.2 billion in the second quarter, a 31% increase from the prior year. This marks the highest second quarter sales results ever recorded, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey.

In the first six months of 2023, PRT sales totaled $22.5 billion, a 28% increase from the same period in 2022.

“Record sales in the first half of the year, combined with carriers signaling expectations for a busy second half of 2023, suggest the U.S. PRT market could approach record sales set in 2022,” said Mark Paracer, assistant research director, LIMRA annuity research. “The robust growth in contracts in the first half of the year is also a newer trend. In past years, much of the business occurred in the fourth quarter. More recently we are seeing the activity spread out throughout the year, as market expansion has led to more competitive pricing and increased plan sponsor interest.”

Single-premium buy-out sales were $14.6 billion in the second quarter, 18% higher than the prior year results. Year-to-date (YTD), buy-out sales jumped 40% to $20.9 billion. There were 165 buy-out contracts in the second quarter, up 16% from the second quarter 2022. YTD, there were 281 buy-out contracts completed, a 30% increase from the prior year results.

In the second quarter 2023, there were four single-premium buy-in contracts sold totaling $1.6 billion, which also reflects the YTD results as there were no buy-in contracts completed in the first quarter.

Single premium buy-out assets reached $251 billion, up 24% from the prior year. Single premium buy-in assets were $7 billion, 6% higher than second quarter 2023. Combined, single premium assets were $258 billion in the second quarter, a 24% increase from the second quarter 2022 results.

A group annuity risk transfer product, such as a pension buy-out product, allows an employer to transfer all or a portion of its pension liability to an insurer. In doing so, an employer can remove the liability from its balance sheet and reduce the volatility of the funded status.

The survey represents 100% of the U.S. pension risk transfer market. Breakouts of pension buy-out sales by quarter and pension buy-in sales by quarter since 2016 are available in the LIMRA Fact Tank.